Correlation Between PAX Global and Slate Office

Can any of the company-specific risk be diversified away by investing in both PAX Global and Slate Office at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining PAX Global and Slate Office into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PAX Global Technology and Slate Office REIT, you can compare the effects of market volatilities on PAX Global and Slate Office and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in PAX Global with a short position of Slate Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of PAX Global and Slate Office.

Diversification Opportunities for PAX Global and Slate Office

0.07

Correlation Coefficient

PAX Global  Slate Office

Significant diversification

The 3 months correlation between PAX and Slate is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding PAX Global Technology and Slate Office REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Slate Office REIT and PAX Global is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on PAX Global Technology are associated (or correlated) with Slate Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Slate Office REIT has no effect on the direction of PAX Global i.e., PAX Global and Slate Office go up and down completely randomly.

Pair Corralation between PAX Global and Slate Office

Assuming the 90 days horizon PAX Global is expected to generate 7.97 times less return on investment than Slate Office. But when comparing it to its historical volatility, PAX Global Technology is 2.95 times less risky than Slate Office. It trades about 0.06 of its potential returns per unit of risk. Slate Office REIT is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  26.00  in Slate Office REIT on October 22, 2024 and sell it today you would earn a total of  7.00  from holding Slate Office REIT or generate 26.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

PAX Global Technology  vs.  Slate Office REIT

PAX Global Technology

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PAX Global Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, PAX Global may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Slate Office REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Slate Office REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with PAX Global and Slate Office

The main advantage of trading using opposite PAX Global and Slate Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PAX Global position performs unexpectedly, Slate Office can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Slate Office will offset losses from the drop in Slate Office's long position.

The idea behind PAX Global Technology and Slate Office REIT pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.